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The historic, publicly owned Nürburgring is in the process of filing for insolvency but says it has provisionally agreed a radical new contract with Bernie Ecclestone that would allow it to continue alternating the Formula One German Grand Prix with Hockenheim.

According to unconfirmed reports, the Formula One group would effectively act as the race promoter, assuming all costs and banking all revenue.

The iconic road course in the Eifel mountains of western Germany is now 90 percent owned by the regional government of Rhineland-Palatinate, while the local administrative district, Landkreis Ahrweiler, holds the remaining 10 percent. The venue is operated by a purpose-formed company, Nürburgring Automotive GmbH.

The present financial problems stem from a major redevelopment in 2009, when projects such as a shopping mall, an entertainment complex and a hotel were completed in a bid to generate revenue from nonmotorsport promotions. The redevelopment was funded by a loan of almost $370 million from the Bank Rhineland-Palatinate, the state's central economic development agency.

It entered into the F1 sharing arrangement with Hockenheim that same year. The new facilities at Nürburgring have not been as popular as hoped and, despite not having to pay out for Formula One's race hosting fees every July, the circuit management has been struggling with crippling cash-flow problems.

Last week, Nürburgring ownership applied to the Executive Commission of the European Union for a $16 million loan from to cover interest payments on its debt, but it was informed that the commission would not reach a decision until the end of July. Moreover, the commission said that a preliminary view to the effect that the request was incompatible with EU rules covering operational aid.

Consequently, state governor Kurt Beck has instructed the board of Nürburgring Automotive to begin a formal winding-up process. He said of the situation: “There is a high probability of insolvency at the end of the month due to a lack of liquidity.”

The track operator approached Formula One to find a way to remain in the alternating arrangement with Hockenheim. It has now asserted in a statement: “Nürburgring Automotive directors Jörg Lindner and Kai Richter have reached agreement with Formula One chief Bernie Ecclestone on a project to guarantee the future of Formula 1 racing on the Nürburgring.”

It is not clear whether this new agreement has been approved by the state government. However, the majority owner has itself invested millions of dollars of public money in the venue in the form of capital and shareholder loans, and can be expected to go to almost any length to keep the venue operational.

Should the Nürburgring close its doors, Hockenheimring GmbH managing director Georg Seiler has indicated that, under certain conditions, he would be willing to step in so that the German Grand Prix remained an annual event. “At present, there is no such request,” he said. “But if there is one, I do see a possibility that Formula One comes back every year to Hockenheim. But everything would have to be agreed: the cost side, the contract, the policy and much more. I don't know that these conditions would be easy to fulfill. Basically, we would be happy if we could continue with the alternation.”